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The 6 Month Interest Rate on 180 Day U

Question 29

Multiple Choice

The 6 month interest rate on 180 day U.S.Treasury Bills is 7.5 percent.In the foreign exchange markets, the spot rate between U.S.dollars and Australian dollars is 1 Australian dollar= $0.452 and the 180 day (6 month) forward rate is 1 mark= $0.46.Determine the expected rate of interest on 6 month Australian government debt securities, assuming that the interest rate parity between the U.S.dollar and Australian dollar exists.


A) 7.35%
B) 1.77%
C) 5.63%
D) 3.82%

Correct Answer:

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